Barely half of German utility companies plan to make any investments in smart grids before 2014, according to a new study published this week.

Steria Mummert Consulting polled 100 decision makers in German utilities on their business plans over the next few years. Although 70% said they planned to invest in the maintenance and modernization of distribution networks, and 65% in energy data management, only half of respondents had network expansion plans for smart grids over the next two years.

“The contradiction is explained by the fact that investments in smart grids lack political models and appropriate incentives,” said Norbert Neumann, an energy expert at Steria.

The consulting company goes on to say that utilities are reluctant to invest in smart grids because they are already expected to fund the construction of new electricity lines in the south of the country.

Germany’s government unveiled a new €32 billion plan in May to build new electricity infrastructure, and expect utilities to bear higher network charges to pay for the scheme.

Steria believes these charges will dissuade smaller companies from investing in smart-grid development.

The study also finds that only 30% of utilities surveyed plan to invest in modern conventional power generation over the next three years, even though this is desperately needed as a back-up for renewables. Many see new gas-fired power plants as unprofitable investments, and there is a lack of other incentives to fund their development.

“Before the industry re-invests in more conventional energy production, it expects legislation for adequate investment incentives,” said Neumann.